DXC Technology (DXC) to Report Q1 Earnings: What's in Store?
DXC Technology DXC is slated to report first-quarter fiscal 2024 results on Aug 2.
For the first quarter of fiscal 2024, the company anticipates revenues between $3.45 billion and $3.58 billion. The Zacks Consensus Estimate for fiscal first-quarter revenues stands at $3.56 billion, indicating a year-over-year decline of approximately 4%.
DXC anticipates non-GAAP earnings between 80 cents and 85 cents per share. The consensus mark for earnings is pegged at 82 per share, suggesting a 9.3% year-over-year increase.
The company’s earnings outpaced estimates thrice in the trailing four quarters while missing the same on one occasion, with an average surprise of 2.2%.
Let’s see how things are shaping up for this announcement.
DXC Technology Company. Price and EPS Surprise
DXC Technology Company. price-eps-surprise | DXC Technology Company. Quote
Factors to Consider
The strong U.S. dollar against major currencies and the concluded divestments of certain business units in the past 12 months are anticipated to have negatively impacted DXC’s fiscal first-quarter top line. The company projected that acquisitions and divestitures concluded in the past 12 months would have a negative impact of 2.6% on first-quarter sales.
Moreover, a weak traditional business is likely to have weighed on the to-be-reported quarter's performance. However, sequential revenue stabilization is expected to have continued.
The negative impacts of the aforementioned factors are likely to have been partially offset by DXC’s strength in the digital business and partnerships, which have been helping it expand in the cloud computing space. A modest increase in IT spending is anticipated to have contributed to the top line in the quarter to be reported.
As a result, excluding the impact of exchange rates, and acquisitions and divestitures in the past 12 months, DXC projects first-quarter total revenues to decline in the range of 1%-2% on an organic basis. Our estimate suggests that the company’s total organic revenues are likely to have declined 1.1% in the to-be-reported quarter.
The year-over-year expected organic revenue decline is mainly due to an anticipated weak performance at DXC’s Global Infrastructure Services (“GIS”), partially offset by the continued strong performance of the Global Business Services (“GBS”) segment.
Our estimate for the GIS segment’s first-quarter revenues is pegged at $1.85 billion, indicating a year-over-year decline of 5.2% on an organic basis. Meanwhile, our estimate of $1.73 billion for the GBS segment’s revenues suggests year-over-year organic growth of 3.2%.
Moreover, margins are forecast to have benefited from the company’s cost-saving initiatives and reduction in debts, which are likely to have lowered its interest expenses during the quarter. DXC projects the adjusted EBIT margin in the range of 7.5%-8% in the fiscal first quarter. Apart from the abovementioned factors, a reduction in shares outstanding on the company’s aggressive share repurchase initiative is likely to have boosted the EPS.
What Our Model Says
Our proven model does not conclusively predict an earnings beat for DXC this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, that’s not the case here.
Though DXC currently carries a Zacks Rank of 3, it has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks With the Favorable Combination
Per our model, NVIDIA NVDA, Apple AAPL and Alibaba BABA have the right combination of elements to post an earnings beat in their upcoming releases.
NVIDIA is slated to report second-quarter fiscal 2024 results on Aug 23. The company sports a Zacks Rank #1 and has an Earnings ESP of +5.56% at present. NVDA’s earnings beat the Zacks Consensus Estimate twice in the trailing four quarters while missing the same on two occasions, the average surprise being 0.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.06 per share, suggesting a whopping increase of 303.9% from the year-ago quarter’s earnings of 51 cents. NVIDIA’s quarterly revenues are estimated to increase 64.4% year over year to $11.02 billion.
Apple carries a Zacks Rank #3 and has an Earnings ESP of +0.66%. The company is scheduled to report third-quarter fiscal 2023 results on Aug 3. Its earnings beat the Zacks Consensus Estimate thrice in the preceding four quarters while missing the same on one occasion, with the average surprise being 2.7%.
The Zacks Consensus Estimate for Apple’s third-quarter earnings stands at $1.19 per share, a penny lower than the year-ago quarter. It is estimated to report revenues of $81.26 billion, which suggests a decrease of approximately 2.1% from the year-ago quarter.
Alibaba carries a Zacks Rank #3 and has an Earnings ESP of +6.19%. The company is scheduled to report first-quarter fiscal 2024 results on Aug 10. Its earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 16.9%.
The Zacks Consensus Estimate for BABA’s first-quarter earnings is pegged at $1.90 per share, indicating a year-over-year increase of 8.6%. The consensus mark for revenues stands at $31.01 billion, suggesting a year-over-year rise of 1%.
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